Rofwgnog
I think this is probably a serious concern that will be subject to greater exposure in macroeconomic debate in years to come, but I'm not sure I would classify it as a component of secular stagnation. I might label it as something that may exacerbate secular stagnation in the future. Its important to consider that everything supplied "for free" on the internet is either being paid for by advertising or is reliant on cash flow attainable in part due to the ''expectation ''of future revenue (typically through advertising). Why can the mere prospect of advertising revenue provide funding for convenient, usable and fun services? Because advertising to consumers with cash in their pockets is a lucrative exercise. In a way, innovation on the internet (and the associated availability of capital for innovation) is an evidence that motivation to spend remains strong, and that the market expects people in the future will spend money to get other people to spend money. It's true that millenials are looking more and more different from consumers of generations past, but that doesn't mean that they aren't spending money. Many of them face monthly student loan payments the size of yesteryear's mortgage payments. As someone currently burying themselves in debt, I know how stressful that can be. But when someone is putting a bunch of their paycheck towards paying off student debt, that isn't preventing them from consuming, that's paying for a good they have already consumed using borrowed money. Additionally, most millenials will face the same monthly bills that past generations did (utilities, electricity), but they'll also face new bills (cell phone with data plan, Netflix account, home internet, etc.) while some of the bills they have in common with their grandparents (health insurance, housing) have soared in cost. This is all still consumption. There's also the natural equilibrium of the market to consider. Everyone has to spend their money on something. If we've all got a lot of money to spend on goods like housing, then we'll be a bit more selective with where we choose to live. Housing costs occupy more than a third of the income for many residents of metropolises like New York City. Did I mention that millenials seem more likely than past generations to wish to live in cities? That demand drives up prices, which means we'll be spending an even greater share of our income, and so the level of consumption doesn't fall; it follows demand. Changing times mean changing consumption patterns, but it doesn't mean less consumption. For example, the shift in household spending on food is likely of much greater significance to the economic history of the U.S. than the modern trend of young people using free Quora accounts and renting rather than buying houses. Food was more than 40% of a household budget a century ago; it is now below 15% (http://www.theatlantic.com/busin...). Do we all walk around now with 25% of our income burning a hole in our collective pocket? No, we have merely changed the goods we choose to consume and their prices have changed as a result. I think the emerging problem of too few jobs will dwarf the problem of too many free goods in years to come. If there is a surplus of labor and too little demand for it, wages will fall. We are already seeing wages stagnate and in some sectors they have fallen in real terms. The falling demand for labor is a much more pressing macroeconomic issue than the falling demand for goods (should we agree that one even exists). * The true causes of secular stagnation have to do with the global savings glut, excessive leveraging throughout the developed world, the intractable issue of the zero lower bound, and of falling rates of population growth. -- Yes, this is very likely. Young people used to be VERY motivated to earn money to buy their own cars, especially men, where the car was not only a status symbol but could function as a place of seduction. Some people have though that much of the hard work and risk taking we in in Silicon Valley is an effect of the hig price of housing, motivating at least some people to work harder. This would also tend to explain part of the high wealth creation from New York's financial sector. -- Consumption of genuinely free entertainment, people watching the sun set instead of watching movies, say, won't be captured in conventional measures of GDP. However, most measures of GDP aren't sensitive to differences in how many people are exposed to a non-rivalrous good (good for which there is no cost in providing them to an additional consumer, like most intellectual property), so depending on which entertainments people were shifting out of GDP might not change at this stage. The second round effect of this change would be to reduce production of paid entertainment and thereby to reduce the measured value of GDP. Ultimately, the new equilibrium effect is likely to involve resources shifting from the production of entertainment to other sectors which contribute to measured GDP, so GDP would likely end up where it was before, but welfare is likely to be significantly higher.